Verivue Inc.: It's not just for cable networks anymore.

The young maker of media distribution switches announced today it has bought CoBlitz, purveyor of high-speed content caching technology developed at Princeton University. The deal was described as a stock swap between two private companies, involving a small amount of cash, according to Verivue CEO Jim Dolce. No deal terms were announced.

CoBlitz has built a content delivery technology that works to help telcos address what Verivue's media switches tackle for cable networks. In both cases, content is cached at the edge of the network and user requests for content are redirected to content routers that then are fulfilled by the nearest edge server. This saves service providers from having every single request for content -- and the content streams themselves -- go all the way across their network's backbone.

For telcos, optimizing video traffic, especially video served over broadband networks by Netflix Inc., Hulu LLC, and other so-called over-the-top providers, is critical, Dolce says. "They've got all the costs associated with having to expand their networks, but there's no incremental revenue," he says. "It's uncompensated traffic growth." Put another way, Dolce says one service provider called over-the-top video "unbillable revenue."

CoBlitz will add this telco-centric technology to Verivue's managed network solution for cable operators, the merits of which are described in Jeff Baumgartner's post Leading Lights Finalists: Cable Products .

In the past year, Dolce says he has seen "half a dozen" RFPs (requests for proposals) from Tier 1 service providers asking for content delivery network (CDN) technology. The main case for building CDNs is network cost savings, Dolce says. With a video CDN built to handle on-demand and over-the-top video requests, service providers "don't have to build as much core router infrastructure," he says.

CDN market moves
The timing of Verivue's buy is interesting given that smaller competitors are still attracting investments from venture capitalists and analysts are talking about new business models for CDNs in the service provider network. (See Oversi Raises $4.9M.)

Steven Hawley, in his upcoming report for Pyramid Research, titled "TV Anywhere: How the Internet and Mobile Technologies Will Change the Pay-TV Industry," noted another content delivery network model that is appealing to service providers -- that of using CDNs and network-based storage to deliver hosted services, features, and content to consumers within their managed networks. Hawley writes:

The current thinking is that operators can realize cost savings by using a common delivery infrastructure to serve multiple devices over device-appropriate access. In addition, the technical performance of operators with captive, in-network, managed CDNs is likely to be better than competing CDN providers that use a distributed approach via the open Internet, which are, in many cases, limited to locating their resources in major markets rather than co-locating them in an operator’s facilities."

Verivue, in the cable market, competes most closely with Cisco Systems Inc. and Motorola Inc.. In the telco market, with its newly acquired technology, the company will take on Cisco (still) and Alcatel-Lucent, among others.

For a quick history of Verivue, have a look at these stories:

• April 2007: Dolce Starts Verivue
• January 2009: Arris Pumps Up Video With Dolce's Verivue
• March 2009: Startup Spotlight -- Verivue Inc.
• September 2009: Verivue's Coffers Swell by $20M

— Phil Harvey, Editor-in-Chief, Light Reading